Student loan borrowers enrolled in a new federal repayment plan could see their monthly payments cut in half in the near future, thanks to a last-minute reprieve by a federal appeals court. At the moment, though, the legal wrangling is sowing confusion throughout the student-aid system, with millions of borrowers' monthly payments thrown into doubt.
plan was designed to lower monthly payments and, for borrowers who took out smaller loans, forgive debts sooner. Both of those efforts have been challenged in court by Republican officials from several states. plan were scheduled to be cut in half, dropping from 10% of their discretionary income to 5%. But in early June, the Education Department informed borrowers whose next payments were due in the first half of July that they would be put into forbearance for one month while their monthly bills were recalculated. Their next payment would be due in August and, for undergraduate loans, based on 5% of their discretionary income.
plan participants, however, had already received bills from their loan servicer for July that reflected the 5% repayment rate. These borrowers will need to make their payments this month, the department says. The
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